Tom King

Recovering investment banker, current dad and fund manager.

[Tom King @tomking84]

@EllliotttB You can run a lot of leverage against mortgages or MBS in a REIT which wouldn’t be allowed in a public fund under the Investment Company Act. Also now there’s a tax break on REIT dividends. That all assumes you might want a highly levered bond fund run by mREIT managers though…

[Tom King @tomking84]

@yenoms FWIW I like PMT as a credit, have owned their prefs off and on.

[Tom King @tomking84]

@yenoms So probability weighted, I would not count on these floating, and it’ll be years of litigation and appeals before a final win in the best case.

[Tom King @tomking84]

@yenoms THEN, even if the plaintiff wins that longshot jurisdiction fight, they have to win on a substance over form argument about the LIBOR act. They have a better shot there, as I said before the answer “should” be floating though LIBOR Act language read strictly points to fixed.

[Tom King @tomking84]

@yenoms Going to try and dig in if I can find the time. The LIBOR act was written without doing a good inventory of all the preferreds out there, and it shows in a few of these edge cases.

[Tom King @tomking84]

@yenoms Hah, I’m a little stale on the LIBOR transition language, sold everything that looked risky early on and erased it from my brain. I probably should take another look. Any chance you have a case number lying around so I can find the docket for PMT?

[Tom King @tomking84]

@iBladesi Yeah QDI makes the yield pretty eye popping. And it’s a retail annuity company which would make you think they care about appearances to some degree. But noncum preferred has literally nothing protected you except issuer goodwill…

[Tom King @tomking84]

@iBladesi Some Portland REO progress which is good. But everything else is really ugly, clear that they are several quarters behind the other bad CMREITs in working through everything, and they still have $450mm of unsecured maturing in ‘26. They’ll squeak through I’m sure but it’s a mess.

[Tom King @tomking84]

@yenoms if the stock is trading near here, that feels a lot better than rushing to restart originations. I thought the call was uneventful.

[Tom King @tomking84]

$CMTG earnings looks fine? DE before losses slipped negative with all the REO, NPLs, new term loan. More 5-rated loans, modest additional CECL provision. But they keep deleveraging FAST. @yenoms

[Tom King @tomking84]

@yenoms Size is risky all on its own, nobody pays attention b/c it’s not worth the cost to fight. Weird governance stuff can happen there. That said, I agree that they look way cleaner. I just don’t know how they ever cover expenses for a decent return at that scale.

[Tom King @tomking84]

@yenoms It’s funny, out of them, GPMT, RC, they are the ones I’m most confident makes it. Maybe makes it at $5 BV, but still.

[Tom King @tomking84]

@yenoms They do keep paying down a lot of repo in "deleveraging payments" -- I wish I had some confidence on how much those are voluntarily saving some interest expense with excess cash vs. nervous lenders with informal margin calls...

[Tom King @tomking84]

@iBladesi Yikes, I'm long from near the lows in '24, didn't want to take gains at the beginning of this year, that's not looking smart. Bonds trade at 550 over, I'd probably rather take that than the puts if you could buy 144A.